TOLANI P. LTD, MUMBAI V. ACIT CEN CIR 17 & 28, MUMBAI

ITA 5212/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8953 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2004-2005
• Appeal Filed On: 07-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KRISHNAMURTHY
• Assessee Lawyers: S M AGRAWAL
• Keywords: Opportunity of being heard; Additional evidence
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI N.K. BILLAIYA (A.M.) ITA NO. 5212/MUM /2011 ASSESSMENT YEAR : 2004-05 M/S TOLANI PVT. LTD., 10-A, BAKHTAWAR, NARIMAN POINT, MUMBAI 400 021. PAN AAACT 4125A VS. ACIT, CEN. CIR. 17 & 28, MUMBAI. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.M. AGRAWAL DEPARTMENT BY : SHRI KRISHNAMURTHY DATE OF HEARING 05-9-2012 DATE OF PRONOUNCEMENT 12-9-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DTD. 19-4-11 PASSED BY THE LD. CIT(A) 39, MUMBAI FOR A.Y. 2004-05. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INVESTMENT IN SHARES, MU TUAL FUNDS ETC. THE RETURN WAS FILED DECLARING TOTAL INCOME OF RS. 12,0 4,907/-. DURING THE COURSE OF ASSESSMENT PROCEEDING, ON PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE COMPANY, THE A.O. INTER ALIA OBSERVED THAT THE ASSESSEE COMPANY OWNED 9 FLATS IN THE SPRINGFIELDS BUILDING, PUNE WHICH WERE SHOWN AS INVESTMENT. OUT OF THESE FLATS, 8 FLATS W ERE CLAIMED TO BE SOLD ITA NO. 5212/MUM/2011 2 DURING THE YEAR UNDER CONSIDERATION AND LONG TERM C APITAL LOSS OF RS. 13,42,201/- HAS BEEN CLAIMED BY THE ASSESSEE. THE ASSESSEE WAS ASKED AS TO WHY NO INCOME FROM HOUSE PROPERTY HAS BEEN SH OWN FROM THE SAID FLATS. IN RESPONSE, THE ASSESSEE FILED EXTRACT OF M INUTES OF BOARD OF DIRECTORS HELD ON 17-3-1998 AND INTER ALIA SUBMITTE D THAT THE PROPERTIES ARE PURELY MEANT FOR BUSINESS PURPOSES AND QUESTION OF CONSIDERING ANNUAL VALUE UNDER THE HEAD INCOME FROM HOUSE PROP ERTIES DOES NOT ARISE. HOWEVER, THE A.O. WHILE OBSERVING THAT THE S AID ISSUE HAS BEEN EXAMINED IN DETAIL IN ASSESSMENT ORDER FOR A.Y. 200 3-04 WHEREIN THE INCOME FROM HOUSE PROPERTY WAS COMPUTED @ 1% OF THE COST OF THE FLATS PER MONTH AND ACCORDINGLY THE A.O. FOLLOWING THE SA ME WORKED OUT THE VALUE OF THE FLAT AT RS. 9,95,955/- SUBJECT TO THE DEDUCTION U/S 24(A) OF THE INCOME TAX ACT, 1961 (THE ACT). 3. ON APPEAL, THE LD. CIT(A) WHILE HOLDING THAT THE PROPERTIES WERE NOT PURCHASED FOR THE PURPOSES OF BUSINESS, DIRECTED TH E A.O. TO ADOPT THE MUNICIPAL RATABLE VALUE AS THE ALV AND IN CASE SECT ION- 6 OF THE MAHARASHTRA RENT CONTROL ACT, 1999 IS NOT APPLICABL E THEN THE A.O. IS DIRECTED TO FIND OUT (I) STANDARD RENT AND (II) MUN ICIPAL RATABLE VALUE AND ADOPT THE HIGHEST OF THESE TWO AS ALV. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF ITA NO. 5212/MUM/2011 3 ADDITION OF DEEMED RENTAL INCOME OF THE RESIDENTIAL FLATS IN SPRINGFIELDS BUILDING , PUNE. 5. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE, AT THE OUTSET, SUBMITS THAT ALL THE GROUNDS ARE AGAINST TH E ADDITION OF DEEMED RENTAL INCOME OF 9 RESIDENTIAL FLATS IN SPRINGFIELD S BUILDING, PUNE SITUATED AT 7 TH AND 8 TH FLOOR OF THE BUILDING. HE FURTHER SUBMITS THAT AS PER LETTER DTD. 3-5-2004 APPEARING AT PAGE 67 OF THE ASSESSEE S PAPER BOOK, ISSUED BY THE CHAIRMAN OF SPRINGFIELDS CO-OPERATIVE HSG. S OCIETY LTD. WHEREIN IT HAS BEEN CONFIRMED THAT THE OCCUPATION CERTIFICATE IN RESPECT OF FLAT BELONGING TO THE ASSESSEE ON THE 7 TH AND 8 TH FLOOR OF THE BUILDING D SPRINGFIELDS HAS NOT BEEN RECEIVED FROM THE PUNE MU NICIPAL CORPORATION, THE LD. CIT(A) HAS ERRED IN HOLDING DEEMED RENTAL I NCOME OF THESE FLATS. HE FURTHER SUBMITS THAT THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 6569/MUM/07 FOR A.Y. 2003-04 ORDER DTD. 20-4-2010 O N THE SIMILAR ISSUE AFTER ADMITTING THE ADDITIONAL EVIDENCE, REST ORED THE ISSUE TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCE. HE, THEREFORE, SUBMITS THAT THE FACTS BE ING SIMILAR, THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE A.O. 6. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING ON THE ORDER OF THE A.O. AND THE LD. CIT(A) SUBMITS THAT HE HAS NO OBJE CTION IF THE ISSUE IS SET ASIDE TO THE FILE TO THE A.O. ITA NO. 5212/MUM/2011 4 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF T HE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND THAT THERE IS NO DISPUTE THAT THE FACTS OF THE PRESENT CASE ARE SIMI LAR TO THE FACTS OF THE CASE FOR THE A.Y. 2003-04. WE FURTHER FIND THAT THE TRIBUNAL IN THE APPEAL FOR THE A.Y. 2003-04 (SUPRA) AFTER ADMITTING THE ADDITIONAL EVIDENCE FILED BY TH E ASSESSEE TO SHOW THAT FLAT ON THE 7 TH AND 8 TH FLOOR OF BUILDING D SPRINGFIELDS PURCHASED BY TH E ASSESSEE WERE UNDER CONSTRUCTION AND OCCUPATION CER TIFICATE HAS NOT BEEN RECEIVED FOR THE SAME FROM PUNE MUNICIPAL CORP ORATION, RESTORED THE ISSUE TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCE. IN THE ABSENCE OF ANY DIS TINGUISHING FEATURE BROUGHT ON RECORD BY THE REVENUE, WE RESPECTFULLY F OLLOWING THE ORDER OF THE TRIBUNAL (SUPRA) AND IN THE INTEREST OF JUSTICE , CONSIDER IT FAIR AND REASONABLE THAT THE MATTER SHOULD GO BACK TO THE FI LE OF THE A.O. AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY THE R EVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTER TO THE FILE O F THE A.O. TO DECIDE THE SAME AFRESH IN THE LIGHT OF THE OBSERVATIONS HEREIN ABOVE AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ALL THE GROUNDS TAKEN BY THE ASSESSEE ARE , THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 5212/MUM/2011 5 8. IN THE RESULT, THE ASSESSEES APPEAL STANDS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 12-09-2012. SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : 12-09-2012. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 39, MUMBA I 4. COMMISSIONER OF INCOME TAX CENT. II MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH EJ, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI